Plummeting IT research-and-development (R&D) spends are in danger of worsening the global economic downturn, an in-depth report warns.
The report by CBS MarketWatch highlights how major tech firms are cutting R&D spending in response to the continued slow market.
CBS MarketWatch warns: "The tech R&D spending decrease is of concern because it is more than just a by-product of the overall economy. In many ways, R&D is a major contributor to the economic future. It eventually shapes a company's sales, and innovation also leads to greater efficiencies across a wide range of other businesses that make use of the new technologies.
"Research and development has long been equated to a company's commitment to future products and services. It takes such resources to build new and innovative products that are expected to spur business when the economy improves."
The report claims that R&D spending in 2002 declined for the first time in 15 years. Budgets were cut by an average 6.8 per cent against those of 2001. Such spending is shrinking across all US industry, the report states.
Though not mentioned in the piece, Apple's commitment to R&D bucks this trend. Apple chief financial officer Fred Anderson said during an analysts meeting in January: "We're going to keep investing through this downturn and continue to move our products and distribution channels ever further ahead of our competitors, so when the economy rebounds we will be positioned for growth."
IBM, Dell and Motorola, however, have been "forced" to cut R&D spending, the report states. Cirrus, 3Com and Lucent trimmed "at least 34 per cent" from their R&D spends, the report states.